Jos. A. Bank scored a comp store sales gain amid declines elsewhere at Tailored Brands, which said progress was being made toward improved operations.
In a Nutshell: As men’s wear retailer Tailored Brands reported declines in sales and earnings in the third quarter, the company announced it had created a new chief customer officer role, providing common leadership for its Men’s Wearhouse, Jos. A. Bank and Moores brands, and has eliminated the brand president positions for these brands.
Carrie Ask, currently brand president of Men’s Wearhouse and Moores, has been appointed chief customer officer. Beth Blake, brand president of Jos. A. Bank, is resigning from the company.
The company issued a fresh outlook for the fourth quarter of fiscal 2019, with expectations for comparable sales at Men’s Wearhouse and Jos. A Bank to range from down 1 percent to up 1 percent, K&G to be flat to up 2 percent and Moores to be down 6 percent to 8 percent.
Tailored Brands reported that advertising expenses decreased $3.1 million to $34 million in the third quarter, primarily driven by reductions in television advertising reflecting a shift to more efficient online advertising, as well as the timing of marketing spend. As a percent of sales, advertising expense decreased 20 basis points to 4.7 percent.
Selling, general and administrative (SG&A) expenses decreased $4.6 million to $228.5 million and increased 30 basis points as a percent of sales.
Sales: Net sales for the third quarter ended Nov. 2 decreased 3 percent to $729.5 million, primarily due to a decrease in comparable sales of 2.2 percent.
Men’s Wearhouse comparable sales fell 2.8 percent. For clothing, the decrease was in average unit retail, partially offset by an increase in transactions and units per transaction. Comparable rental services revenue declined 2.6 percent.
Jos. A. Bank comparable sales increased 0.5 percent, primarily due to an increase both in transactions and in units per transaction, partially offset by a decrease in average unit retail.
K&G comparable sales were down 1.5 percent, mainly due to a decrease in units per transaction and transactions, partially offset by an increase in average unit retail. Moores comparable sales fell 5.5 percent on a decrease in average unit retail and transactions, while units per transaction were essentially flat.
Earnings: Net earnings declined 20 percent to $27.8 million compared to $34.8 million last year.
Operating income fell 39.58 percent to $45.5 million compared to $75.3 million last year and operating margin decreased 380 basis points.
Gross margin was $308 million, a decrease of $37.5 million, primarily due to the decrease in net sales. As a percent of sales, total gross margin and adjusted total gross margin decreased 380 basis points to 42.2 percent, mainly driven by increased promotional activities, as well as deleveraging of occupancy costs.
CEO’s Take: Dinesh Lathi, president and CEO, said: “We are pleased to report third quarter comparable sales and adjusted earnings per share above our expectations. We delivered sequential comparable sales improvement at both Men’s Wearhouse and Jos. A. Bank, with a return to positive comparable sales at Jos. A. Bank. On a sequential basis, both brands generated higher transactions and increased comparable sales across multiple merchandise categories.”
“Our third quarter performance reflects continued progress in each of our transformational strategies, including improved sales in our polished casual categories, higher online sales driven by enhanced e-commerce experiences and online marketing, and new customer acquisition and increased traffic reflecting more effective marketing campaigns and channel strategies,” Lathi added.